Besides offering payday advances, payday lenders often provide a selection of other loan services suited to meet the demands of different financial circumstances. A payday advance can be an ideal option for borrowers who require a small lump sum of money to cover short-term expenses, but for those who need to take out loans with periodic payment plans or for larger amounts of cash than what is available through a payday advance, installment loans, line of credit loans, or title loans may be more appropriate.
Installment Loans
Much like a payday loan, an installment loan consists of a single cash advance. However, instead of paying off the entire principal by the date of their next paycheck, borrowers divide repayment of the loan into equal amounts, which are paid at regular intervals over a set period of time. Usually, these incremental payments are scheduled to align with the frequency of the customer’s pay cycle.
Eligibility for an installment loan requires an applicant to have a stable income, an active checking account, and government-issued identification that proves they meet minimum age requirements. Upon application approval, the customer chooses the level of their loan, up to the authorized maximum, and they receive their funds after signing the documents stating the terms of the loan.
In the contract, the lender and customer agree to a repayment schedule that outlines minimum payments, the dates on which they are due, and the length of time it will take to pay off the loan in full. Since installment loans accrue daily interest, borrowers can reduce the total cost of their loan if they fulfill the terms of the agreement early by paying ahead of schedule or making payments above the mandated minimum.
Consumers can generally access larger amounts of money through an installment loan than a payday advance. This, together with the gradual repayment scheme, can make these loans a preferable choice for covering such unanticipated debts as medical costs. With installment loans, as with payday advances, the actual amount available to an individual borrower will vary in proportion to their monthly income and in accordance with the maximum personal loan available under the law in their state of residence.
Line of Credit Loans
For those uncertain about their prospective expenses, in some states line of credit loans offer a means for consumers to obtain ongoing, flexible access to cash. Applicants for line of credit loans must meet eligibility requirements similar to those for installment and payday loans, and upon approval customers receive authorization for a maximum line of credit.
What distinguishes line of credit loans from payday advances and installment loans is that the recipient can elect to borrow as little or as much money as they need, up to their authorized limit. A customer approved for a $1,000 line of credit, for instance, could choose to borrow an advance of $350. The remainder of the $1,000 stays available to them and they may take additional advances as needed, up to that total limit.
Payments on line of credit loans are made in regularly scheduled increments, and daily interest accrues only on the cash actually borrowed. On payment due dates, the borrower can pay the minimum sum required or provide larger sums, up to the full extent of the balance, thereby shortening the length of the loan and minimizing interest charges.
Title Loans
Title loans enable people to obtain a loan by pledging the title to their automobile, motorcycle, or other accepted vehicle as collateral. Factors such as the estimated value and condition of the vehicle, state laws governing title loans, and the lender chosen by a consumer all influence the value of a title loan. In most cases, a title loan will exceed the amount of money available to a borrower through a payday advance. As such, title loans can often serve as a feasible credit solution when people face large emergency cash shortfalls.
To apply for a title loan, an individual must possess a fully operable vehicle and a clear title for that vehicle. The title loan process entails filling out paperwork to verify vehicle ownership, identification, and home address, as well as undergoing a vehicle inspection by the lender. Following the inspection, a loan amount is determined and, upon the borrower’s acceptance of the loan terms, a lien is placed on the vehicle title and it is temporarily surrendered to the lender.
As with installment loans, title loans are repaid in a series of regular minimum payments covering the principal and accrued interest. So long as payments are made on schedule, at no point does a title loan borrower lose possession of their vehicle, and they are able to use it as normal throughout the period over which they repay the loan. The lender releases the lien upon receipt of full repayment, at which point the title returns to the vehicle owner.
